In China, talk of ‘super-financial regulator’ is cheap – until next crisis hits

Financial crises are said to come once a decade – the Black Monday market crash of 1987, the Asian contagion in 1997 and the global financial crisis of 2007. If true, we’re about due for a hit.

And if a crisis is looming, China must be especially cautious given it’s the world’s second-largest economy, with capital markets full of shadow bankers and “crocodiles”– Beijing’s term for high-rolling insider traders.

One way to deal with these risks is through establishing a super-financial regulator. It would enable different regulators to act in harmony, rooting out financial risks that stem from the country’s unregulated fund flows across banking, securities, insurance and trust firms.

“The current regime [of separate regulation] no longer suits a rapidly growing financial industry and cannot prevent the outbreak of potential systemic risks,” said Yin Zhongqing, deputy director of the financial and economic affairs committee under the National People’s Congress.

Yin backs a merger of the national banking, securities and insurance regulators to create a body similar to the Financial Conduct Authority in Britain. “There is little difference on whether it should be changed, the differences are mainly on how,” he said.